In an effort to boost its shareholder value, Aegon N.V. (AEG), has recently completed its share buyback program that was announced last month.
On Sep 17, 2013, the board of directors of Aegon had announced the share buyback program, where they declared its intention to buy nearly 19 million shares to neutralize the dilutive effect of the 2013 interim dividend paid in shares. Nearly 55% of the shareholders had elected to receive the cash dividend and the remaining 45% elected for the stock dividend. Subsequently, nearly 19.05 million shares were issued on Sep 13, 2013.
Aegon has repurchased all of these shares between Sep 17, 2013 and Oct 14, 2013 for EUR 5.6233 ($4.2) per share or an aggregate price of EUR 107.1 million ($79.1 million).
Aegon’s financial strength allowed it to fund its buyback program. As of Jun 30, 2013, operational free cash flow of the company stood at EUR 674 million ($518 million). Aegon expects to achieve operational free cash flows between EUR 1.3 billion and EUR1.6 billion by 2015. We believe realizing this goal would help Aegon to further engage in share repurchases or pay regular dividends thereby retaining investor confidence as well as attracting new investors.
Being positioned to capitalize on the rising interest rates and recent developments in the U.S., Aegon expects to create further long-term value for its shareholders. We believe that this share repurchase will help Aegon to achieve its desired goal. The company continues to focus on improving revenue, expanding margins and fortifying its capital structure.
However, no earnings momentum has been witnessed over the last 7 days. We expect the favorable development will encourage analysts to pull up their estimates, exerting upward pressure on the Zacks Rank.
However, in a low interest rate environment Aegon’s underlying earnings and Return on Equity (:ROE) had been a drag. Thus we currently have a Zacks Rank #4 (Sell) on the stock. Among others in the financial services space, FBL Financial Group Inc. (FFG) carry a favorable Zacks Rank #1 (Strong Buy) while American International Group Inc. (AIG) and Assurant Inc. (AIZ) carry a Zacks Rank #2 (Buy) and appear impressive.